Basics of auto insurance law: What you should be aware of
When you wish to insure your vehicle, you must find out the insurance requirements in your state. Each state has its own system of regulating the insurance provisions. When purchasing a policy, you may get tempted to drop one or more coverage to obtain cheap auto insurance. But you should not do so without knowing the type of coverage that is mandatory under the legal system followed in your state. The states can be categorized with respect to car insurance into tort states, no-fault states, choice states and add-on states.
What are tort states?
In tort states, the legal system primarily focuses on redress of civil wrongs caused by the negligence of a driver. For example, if a driver intentionally does not abide by traffic signals and as a result of it collides with a car, the injured driver can file a lawsuit against the driver at fault for obtaining redress of damages like medical expenses, loss of earnings, etc.
What is the legal system followed in no-fault states?
In a no-fault state, the legal system stipulates first party benefits and limitations on the right to sue for torts. In the event of a car accident in a no-fault state, both the drivers can file a claim against their own insurance providers to compensate for damages. In no-fault states, personal injury protection (PIP) coverage is compulsory. No-fault policies allow for litigation based on monetary or quantitative threshold and verbal or qualitative threshold.
What are choice states?
In choice states, drivers can choose between no-fault and tort liability car insurance policies. Policy holders can also switch between these 2 types by canceling current policies and purchasing new ones. Kentucky, New Jersey and Pennsylvania have adopted a choice system for auto insurance.
What is the legal system followed in add-on states?
The legal system in add-on states provides for first-party PIP benefits along with the right to sue for tort liability. The PIP benefits are considered as the “add-on” to the policy and it is either compulsory or optional, depending upon the states. There are ten states that have adopted this legal system for auto insurance.